Wrong again Jaknife - we were not laughed out of court. The reason the Judge could not award us the compensation, was because of the LSE.
The Judge agreed that the MMs had defaulted on their contracts and failed to settle according to the LSE Rules. She disagreed with the MMs claim that they could use 'best endeavours' to settle.
The Judge also remarked that the MMs did not take any and all reasonable steps to ensure their settlement obligations. In other words, they made contracts whilst they were not in possession of the shares - they were short, but it was a covered short.
Shore Capital stated to the Financial Times on 3 December 2003 that:
“We have no knowledge of any intended legal action against us. In any event, we were puzzled why this would be contemplated as we had no material position in Room Service - short or otherwise.”
Yet the Judge agreed that:
SHORE CAPITAL HAD BROKEN THE LSE SETTLEMENT RULES
Quite simply, any position that causes a member of the Exchange to breach the rules of the Exchange IS a material position.
The Court agreed that they had failed to deliver and were therefore 'short'. It might be a covered short - but it was short none the less.
This means that the statement made in December 2003 was false and misleading. The person concerned could be prosecuted for making a misleading statement under the FSMA and under the circumstances, we will accept a public apology from him. Failing that, he may receive a writ for a private prosecution in due course.
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